Friday Watch

Evening Headlines

Bloomberg:                

• Germany Risks ‘Imminent’ Recession on Gas Cutoff, Deutsche Bank Says.
• Hong Kong Marks 25 Years of Chinese Rule.    
• Colombia Raises Rates by 150 Basis Points in Test for Petro.
• What the Falling Yen Means for Japan’s Trade Partners.
• Stocks Set for Cautious Asia Open Amid Bond Rally: Markets Wrap. 
• Oil Posts First Monthly Drop This Year as OPEC+ Hikes Supply.
• Metals Cap Worst Quarter Since 2008 on Global Downturn Angst.
• Bears Picked Right Stocks to Short With Declines Twice the S&P’s.
  
• JPMorgan’s Michele Warns on Recession as Brutal First Half Draws to End.
  
• Michael Burry Thinks We May Be About Halfway Through Market Fall.  
• Celsius Says Its Exploring Strategic Transactions, Restructuring.

Wall Street Journal:

• High Court Limits EPA on Emissions.
• Investors gird for more volatility after a bruising start to 2022
• Crypto Investors Wonder What Else Could Go Wrong.
• Growth Fears Challenge Soaring Oil Prices.
• Cooling Consumer Spending Points to Further Economic Slowdown.
• Tencent, ByteDance Implement Fresh Layoffs Amid China’s Economic Pains.

Fox News:

• New poll reveals which political party is the most patriotic, but national pride sees dramatic downturn.

CNBC.com:

• The market’s worst first half in 50 years has all come down to one thing.
• Big technology stocks like Tesla, Amazon and Microsoft just finished their worst quarter in years.
• Internal Facebook memo warns company must be disciplined, prioritize ruthlessly.
• Micron warns weakening consumer demand will hurt smartphone sales.
• Bitcoin just had its worst month on record.

Zero Hedge:

• The Fed Is Quietly Handing Out $250 Million To A Handful Of Happy Recipients Every Single Day.
• Chip Makers Stall On Building New Semiconductor Plants As Subsidies Bill Languishes.
• "Children Cannot Consent": Teen Who Had Double Mastectomy Regrets 'Gender Journey'.
• Four Men Charged After 53 Migrants Die In Smuggling Disaster.
• DOJ Has VA Suspend All Benefits Of Jan. 6 Prisoner.
• The One Housing Chart That Shows A 'Buyer's Market' Has Returned.
• Still buying the dip?
• Nvidia GPU Prices Plummet As Crypto Mining Craters.
• California Just Leaked The Name, Address Of Every Concealed Carry Licensee In The State.
• States Need To Avoid 'Cures' That Can Make Inflation Worse.
• S&P 500 suffered its worst H1 performance since 1970 - Newsquawk Asia-Pac Market Open.
• Biden & G-7 Push World Into "Nightmare Scenario".
• Tesla's Texas Gigafactory Reportedly Outputting 5,000 Vehicles Per Week.
• S&P 500 posts worst half-year since 1970 as recession fears mount - Newsquawk US Market Wrap.
• The Jaws Of Trade Squeezing The Supply Chain.
• The Astonishing Implications Of Schedule F.
• Micron Plunges After Catastrophic Guidance Confirms Worst Fears.
• First-Half FUBAR: Stocks Worst In 60 Years, Bonds & Bitcoin Worst Ever.

TheGatewayPundit.com:

• WOW! Joe Biden Confronted on 85% Wrong-Track Number, Record Inflation — Blames US Supreme Court (VIDEO).
• Biden Takes Aim at America’s Largest Oil Field, Threatens to Stop Production, Sending Gas Prices Soaring.
• Abraham Lincoln Bust, Gettysburg Address Plaque Removed From Cornell University Library Because Someone Complained.
• Steve Bannon and The War Room Call for Criminal Referrals Against Cassidy Hutchinson for Numerous Lies During Congressional Testimony (VIDEO).
• Dr. Zev Zelenko Who Saved Thousands of Lives During the COVID Pandemic – Passes Away After Long Battle with Cancer.
• Unhinged Climate Activists Glue Their Hands on Van Gogh Painting in London to Protest Global Warming.
• AOC Calls For Supreme Court to be Abolished After High Court Constrains EPA’s Power to Regulate Greenhouse Gases.

OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 835,062 Reports(+3,252 from prior week) Through June 17th, 2022.

SKirsch.com:

• Using the MGH numbers with our own VAERS queries, we have 247 cases per million doses from the MGH study divided by 5.97 cases per million doses from VAERS. 247/5.97 = 41. This suggests that the VAERS under-reporting factor (URF) is 41X.

Covid-19(Data, Maps, Graphs):

• Our World in Data:  New Global Covid-19 Cases(7-day rolling average graphs). New US Covid Hospital Admissions/ICU Admissions/Deaths
  
• FT.com:  Fully Vaccinated by Country(graph). Global Lockdown Stringency Index(map).
• Bloomberg.com:  International Travel Restrictions.  Case Graphs by State.
  
• NYTimes.com:  County Trends and Clusters. Local ICU Occupancy.
  
• Brown School of Public Health:  Covid Severity by State/County(map).  US Hospital Capacity(region).
  
• CovidActNow:  Covid Severity/Infection Rate by Metro Area.
  
• KFF:  US Vaccinations by Race/Ethnicity.
  
• Carnegie Mellon: Covid-Like Symptoms in Community. Covid Symptom Searches on Google. Covid-Related Dr.Visits.  Restaurant Visits. Wearing Masks. (graphs)
  
• Safegraph.com:  Commerce Patterns(graphs).

Night Trading 

• Asian equity indices are unch. to +.5% on average.

• Asia Ex-Japan Investment Grade CDS Index 143.75 +7.0 basis points. 

• China Sovereign CDS 85.25 +2.75 basis points.
  

• Bloomberg Emerging Markets Currency Index 50.66 -.08%.  
• Bloomberg Global Risk-On/Risk Off Index 4,509.0 +310.0 points.
• Volatility Index(VIX) futures 29.3 +.4%.
• Euro Stoxx 50 futures +.41%.

• S&P 500 futures -.05%.

• NASDAQ 100 futures +.02%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• None of note
  

After the Close:

• None of note
  

Economic Releases

10:00 am EST

• Construction Spending MoM for May is estimated to rise +.4% versus a +.2% gain in April.
• ISM Manufacturing for June is estimated to fall to 54.5 versus 56.1 in May.
• ISM Prices Paid for June is estimated to fall to 79.9 versus 82.2 in May.
  

Afternoon:

• Wards Total Vehicle Sales for June is estimated to rise to 13.3M versus 12.68M in May.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The China Manufacturing PMI report and the Eurozone PMI report could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are modestly higher, boosted by commodity and industrial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

Stocks Finish Lower on US Policy-Induced Stagflation Fears, Earnings Outlook Worries, Technical Selling, Commodity/Retail Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance:  Most Sectors Declining
  

• Volume:  Around Average

• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• Volatility(VIX) 28.7 +2.1%
• DJIA Intraday % Swing 1.22% +46.4%
  
• Bloomberg Global Risk On/Risk Off Index 4,315.0 -227.0 points

• Euro/Yen Carry Return Index 146.14 -.43%

• Emerging Markets Currency Volatility(VXY) 11.9 +.2%

• CBOE S&P 500 Implied Correlation Index 48.1 +.6% 

• ISE Sentiment Index 92.0 +12.0 points
  

• Total Put/Call .90 -27.4%

• NYSE Arms 2.2 +40.5%

Credit Investor Angst:

• North American Investment Grade CDS Index 100.72 +.7%
  

• US Energy High-Yield OAS 524.23 +5.5%
• Bloomberg TRACE # Distressed Bonds Traded 465.0 +44.0
  

• European Financial Sector CDS Index 128.70 +.95%

• Italian/German 10Y Yld Spread 193.0 basis points +5.0 basis points
  

• Asia Ex-Japan Investment Grade CDS Index 141.79 +4.9%
  

• Emerging Market CDS Index 338.70 +.3%
  

• China Corp. High-Yield Bond USD ETF(KHYB) 27.31 -.17%
  
• Ukraine Sovereign Debt Credit Default Swap 9,415.27 -.4%
  

• 2-Year Swap Spread 32.75 basis points -2.5 basis points
  

• TED Spread 54.25 basis points +5.0 basis points
  

• 3-Month EUR/USD Cross-Currency Basis Swap -26.5 basis points -1.0 basis points
  
• MBS  5/10 Treasury Spread  136.0 -1.0 basis point
  
• iShares CMBS ETF 48.19 +.63%
  

Economic Gauges:

• Bloomberg Emerging Markets Currency Index 50.71 -.47%
• 3-Month T-Bill Yield 1.64% -8.0 basis points
  

• Yield Curve 4.5 basis points (2s/10s) +1.25 basis points
  

• China Iron Ore Spot 115.3 USD/Metric Tonne -5.2%

• Citi US Economic Surprise Index -71.6 -3.3 points

• Citi Eurozone Economic Surprise Index -25.3 -8.4 points
  

• Citi Emerging Markets Economic Surprise Index 28.5 +5.5 points

• 10-Year TIPS Spread 2.35 -4.0 basis points
  
• Highest target rate probability for September 21st FOMC meeting: 68.5%(+2.3 percentage points) chance of 2.75%-3.0%. Highest target rate probability for November 2nd meeting: 49.1%(+14.3 percentage points) chance of 3.0%-3.25%.
  

US Covid-19:

• 214 new infections/100K people(last 7 days total). 13.0%(-1.0 percentage point) of 1/14 peak -22/100K people from prior report.
  
• New Covid-19 patient hospital admissions per 100K population -77.3%(-.1 percentage point) from peak 7-day avg. of 1/9/21 - 1/15/22
  

Overseas Futures:

• Nikkei 225 Futures: Indicating -13 open in Japan 
• China A50 Futures: Indicating -40 open in China

• DAX Futures: Indicating +6 open in Germany

Portfolio:

• Slightly Lower:  On losses in my in my medical/tech/commodity sector longs
  

• Disclosed Trades:  Added to my (IWM)/(QQQ) hedges
  

• Market Exposure:  Moved to 25% Net Long
  

Mid-Day Market Internals

NYSE Composite Index:

• Volume Running -8.3% Below 100-Day Average 
• 9 Sectors Declining, 2 Sectors Rising
• 38.3% of Issues Advancing, 57.9% Declining
• 8 New 52-Week Highs, 265 New Lows
• 20.5% of Issues Above 200-day Moving Average
• Average 14-Day RSI 41.1% 
• Bloomberg Global Risk-On/Risk-Off Index 4,077.0 -464.0 points
• Russell 1000: Growth/Value 15,112.0 -.39%
  
• Vix 29.4 +4.4%
• Total Put/Call .96 -22.6%
• TRIN/Arms 1.85 +19.6%

Thursday Watch

Evening Headlines

Bloomberg:                 

• Shaky Housing Adds $7 Trillion Hazard to Australia’s Economy.
• Beer Made From Recycled Toilet Water Wins Admirers in Singapore.  
• Stocks in Asia, US Futures Dip on Inflation Angst: Markets Wrap.
• Oil Rally Reverses Amid Signs of Slowing Gasoline Demand.
• Disquiet Over the Housing Market Is Only Growing.
• Democrats Weigh Paring Biden Tax Hike to Win Over Manchin.
• Cities Stung by Great Resignation Hike Wages, Just as Recession Looms.
• Recession-Doubter Neil Dutta Turns Cautious on US Economy After Fed Signals.
  
• Luxury Furniture Seller RH Blames Interest Rates for Sales Slump.  
• Newsletter Startup Substack Cuts 14% of Staff as Downturn Looms.  
• Bull Market Never Ended for Analysts Wedded to 100% Price Rally Calls.  
• Pfizer and BioNTech to Get $3.2 Billion From US in Covid Vaccine Deal.
• LA Increases Loans for First-Time Homebuyers in One of Hottest Markets in US.  
• More Crypto ‘Meltdowns’ to Come Thanks to Fed Mistakes, Pantera’s Morehead Says.

Wall Street Journal:

• U.S. Military to Expand in Europe to Counter Russia.
• CEO Stock Sales Raise Questions About Insider Trading.
• Bed Bath & Beyond CEO Exits as Sales Plunge.
• Powell Says Fed Must Accept Higher Recession Risk to Combat Inflation.
• Behind the Celsius Sales Pitch Was a Crypto Firm Built on Risk.
• U.S. Agrees to Pay $3.2 Billion for More Pfizer Covid Vaccines.

Fox News:

• Ben Carson defends Clarence Thomas, says liberals believe Black conservatives 'worse than Satan'.
• Poll reveals Georgia GOP facing uphill battle in two key races.
• Soaring violent crime in Dem-run city has businesses packing their bags.

CNBC.com:

• Stock futures are flat as S&P 500 tracks for worst first half of the year since 1970.
• Bitcoin briefly drops below $20,000 again as pressure continues to mount.
• Powell vows to prevent inflation from taking hold in the U.S. for the long run.
• RH shares slide after company lowers its outlook for the year. 
  

MarketWatch:           

• What’s next for the stock market after it has its worst 1st half since 1970? Here is the history.  
• Crypto exchange CoinFlex won’t lift withdrawal freeze yet, despite ‘significant progress’ in rescue token fundraising, CEO says.  
• Bitcoin could experience a ‘final washout’ decline before reaching a bottom of $13,000, this technical analyst says.  
• Why the S&P 500 may be in for a 1966-style bear market, according to DWS Group.  
• Court orders liquidation of crypto hedge fund Three Arrows.

Zero Hedge:

• Jan. 6 'Electronic Surveillance Unit' Was "Illegal", Says Rep. Gohmert; Attorney Suggests "Entrapment".
• White House Is Quietly Modeling For $200 Oil "Shock".
• "Bullsh*t": Claim Trump "Lunged" For Steering Wheel On Jan 6 Discredited By Secret Service.
• Biden Admin To Deploy 1.6 Million Doses Of Monkeypox Vaccines In "Enhanced" Strategy.
• India's Largest Cement Maker "Circumventing The Dollar" In Russian-Coal-For-Yuan Deal.
• The Influencer's Dilemma (Why Elon Musk Is Probably Right About Twitter).
• When Does The Recession Begin? Here Is What Wall Street Thinks.
• China's Productive Capacity Is Starting To Slip Away To India And Southeast Asia.
• Crisis Of Faith: Politicians & Press Escalate Attacks On Legitimacy Of Supreme Court.
• US stocks lacked direction and dollar strength persisted heading into month-end - Newsquawk Asia-Pac Market Open.
• US Emergency Oil Reserves Tumble To Record Low 27 Days Worth Of Supply.
• Americans Become More Pessimistic About The Future Of The Country.
• US Consumer Implodes As RH Cuts Guidance For 2nd Time This Month, Warns Of Cratering Demand.
• What Will It Take To End Rampant Home-Price Inflation?
• Transportation Secretary Warns: "There Are Going To Be Challenges" With Flights On Fourth Of July Weekend.
• Demand Destruction Emerges As Americans Cancel Road Trips.
• Stocks choppy into month-end while Bonds rally - Newsquawk US Market Wrap.
• Bonds & The Dollar Bid As Recession Risks Rise, Black Gold & Breakevens Battered.

Newsmax: 

• Russians Fight to Encircle Ukraine's Last Eastern Stronghold.

TheGatewayPundit.com: 

• Get Woke, Go Broke: Bed Bath & Beyond Turns off AC in Stores to Save Money More Than a Year After Dropping MyPillow.
• MORE LIES: Cassidy Hutchinson ALSO Lied about Handwritten Note in Testimony — And Liz Cheney KNEW IT WAS A FALSE because the Actual Author of the Note Testified It Was His!
• 32-Year-Old Comedian Nick Nemeroff Suddenly Dies in His Sleep — Posted Earlier About Suffering Side Effects of COVID Vaccine (VIDEO).
• Biden Climate Advisor Gina McCarthy CHEERS the News that “Fossil Fuels Are Losing Jobs” As Gas Floats near $5 a Gallon.
• Biden Train Wreck: AP Poll: 85 Percent of Americans Say Nation Is on the Wrong Track, Including 78 Percent of Democrats.
• Biden Climate Envoy John Kerry Amid Supply Chain Crisis: “We Need to Spur the Transition to Green Shipping” (VIDEO).
• Shocking Footage From Disney Reveals Upcoming Transgender Character Saying ‘Men Have Periods Too’ (Video).

 The Epoch Times:

• China’s War Machine Is Betting the Future on Drones.
• Over 100 Georgia Sheriffs Condemn Democratic Gubernatorial Challenger Over ‘Defund the Police’.

 OpenVAERS:

• VAERS US COVID Vaccine Adverse Event Reports. 835,062 Reports(+3,252 from prior week) Through June 17th, 2022.

SKirsch.com:

• Using the MGH numbers with our own VAERS queries, we have 247 cases per million doses from the MGH study divided by 5.97 cases per million doses from VAERS. 247/5.97 = 41. This suggests that the VAERS under-reporting factor (URF) is 41X.

Covid-19(Data, Maps, Graphs):

• Our World in Data:  New Global Covid-19 Cases(7-day rolling average graphs). New US Covid Hospital Admissions/ICU Admissions/Deaths
  
• FT.com:  Fully Vaccinated by Country(graph). Global Lockdown Stringency Index(map).
• Bloomberg.com:  International Travel Restrictions.  Case Graphs by State.
  
• NYTimes.com:  County Trends and Clusters. Local ICU Occupancy.
  
• Brown School of Public Health:  Covid Severity by State/County(map).  US Hospital Capacity(region).
  
• CovidActNow:  Covid Severity/Infection Rate by Metro Area.
  
• KFF:  US Vaccinations by Race/Ethnicity.
  
• Carnegie Mellon: Covid-Like Symptoms in Community. Covid Symptom Searches on Google. Covid-Related Dr.Visits.  Restaurant Visits. Wearing Masks. (graphs)
  
• Safegraph.com:  Commerce Patterns(graphs).

Night Trading 

• Asian equity indices are -.5% to unch. on average.

• Asia Ex-Japan Investment Grade CDS Index 136.75 +5.25 basis points. 

• China Sovereign CDS 82.5 +.25 basis point.
  

• Bloomberg Emerging Markets Currency Index 50.92 -.05%.  
• Bloomberg Global Risk-On/Risk Off Index 4,704.0 +165.0 points.
• Volatility Index(VIX) futures 28.1 -.8%.
• Euro Stoxx 50 futures -.17%.

• S&P 500 futures -.14%.

• NASDAQ 100 futures -.16%. 

Morning Preview Links

Earnings of Note 
Company/Estimate 

 

Before the Open: 

• (AYI)/2.91
• (STZ)/2.51
• (LNN)/1.60
• (SMPL)/.25
• (WBA)/.93
  

After the Close:

• (MU)/2.45

Economic Releases

8:30 am EST

• Personal Income for May is estimated to rise +.5% versus a +.4% gain in April.
• Personal Spending for May is estimated to rise +.4% versus a +.9% gain in April.
• Real Personal Spending for May is estimated to fall -.3% versus a +.7% gain in April.
• The PCE Core MoM for May is estimated to rise +.7% versus a +.2% gain in April.
• Initial Jobless Claims for last week are estimated at 229K versus 229K the prior week. 
• Continuing Claims are estimated to rise to 1318K versus 1315K prior.
  

9:45 am EST

• The MNI Chicago PMI for June is estimated to fall to 58.0 versus 60.3 in May.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The China Services PMI report, weekly EIA natural gas inventory report and the (MU) analyst call could also impact global trading today.

US Equity Market Hours

• 9:30 am - 4:00 pm EST
  

BOTTOM LINE: Asian indices are modestly lower, weighed down by technology and consumer shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 50% net long heading into the day.